CALIAN REACHES AGREEMENT WITH MED-EMERG WHICH ENDS LITIGATION
Kanata, Ontario July 11, 2006 - Calian Technologies Ltd. (TSX: CTY) today announced that it has reached an agreement with Med-Emerg International Inc. (NASDAQ.MDER.ob) which ends the litigation between the two companies and allows each to focus its management's time and energy towards growing their respective businesses.
Calian has agreed to pay Med-Emerg $2.0 million in return for a complete and full release and discharge of the $100 million claim filed by Med-Emerg on January 24, 2005 against Calian and a former employee of Med-Emerg. The release confirms that Calian does not admit and in fact denies all allegations. The after-tax impact of this amount has not been reflected in previously issued guidance.
"We were confident in our position, but faced with the substantial legal costs and extensive management diversion associated with a multi-year litigation, we believe that the agreement is in the best interests of the company" stated Ray Basler, President and CEO. "Removing the overhang of the lawsuit allows us to focus on operations and building our business."
Given the enormous pressures on governments to streamline their healthcare systems and the increasing opportunities that will be generated in this emerging market, Calian has also invested $3.5 million in Med-Emerg in the form of convertible preferred shares. Med-Emerg has a good long-standing reputation in many aspects of private delivery of healthcare services and is a premier consultant for policy makers and various healthcare organizations. This puts them in an ideal position to address future requirements and for Calian to participate in that process." continued Mr. Basler.
The preferred shares, which have a face value of $3.9 million, will be convertible into 8,750,000 common shares of Med-Emerg at Calian's option. After two years, provided certain conditions are met, Med-Emerg is also entitled to cause the preferred shares to be converted into common shares under certain circumstances where the stock trades above US$0.46 over a stipulated period of time. On a fully converted basis, this investment represents a 13% interest based on the current number of common shares outstanding. In the event the shares are not converted by July 11, 2011, the preferred shares will be redeemed, and at the option of Med-Emerg the face value will be satisfied either in cash or in Med-Emerg common shares based on the then fair market value of the common shares.
"Med-Emerg has strengthened its management and ownership group and over the last several quarters has refocused its energy on its core capabilities. Based on the impressive turnaround to date, Calian is confident that the rejuvenated Med-Emerg has the capability to meet the future challenges associated with Canada's evolving health care needs. I am also pleased that Calian's Chairman, Larry O'Brien, is expected to join the Med-Emerg board of directors at its next shareholders meeting, which will bring them the added benefit of Calian's experience", stated Mr. Basler.
About Calian: Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. The Business and Technology Services Division augments customer workforces with flexible short and long-term placements, recruitment and outsourcing of engineering, health care professionals and other skilled professionals. The Systems Engineering Division plans, designs and implements solutions for many of the world's space agencies and leading communications satellite manufacturers and operators, as well as providing contract manufacturing services for customers in North America.
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